On Oct 28, QEP Resources Inc. QEP reported better-than-expected third-quarter 2015 results on strong production growth. The domestic energy explorer announced adjusted earnings per share of 1 cent, which compared favorably with the Zacks Consensus Estimate of a loss of 9 cents.
However, the bottom line declined substantially from the prior-year level of 41 cents per share. Lower oil, natural gas and natural gas liquids prices affected the results.
Quarterly revenues of $536.7 million failed to meet the Zacks Consensus Estimate of $662 million and also plummeted 41% from the third-quarter 2014 level.
Volume Analysis
QEP Resources’ overall production during the third quarter was 86.7 billion cubic feet equivalent (Bcfe), a quarterly record. This reflects a 9% increase from the prior-year quarter. Notably, gas accounts for 55.4% of the total production.
Natural gas volumes improved 15% year over year to 48 Bcf and oil volumes increased about 10% to 5,162.1 thousand barrels. However, Natural Gas Liquids fell about 18% to 1,286.9 thousand barrels in the same period.
Realized Prices
QEP Resources’ average realized natural gas price in the quarter was $3.17 per thousand cubic feet, down from the year-ago quarter price of $4.23. Moreover, average oil price realization decreased 27% to $59.76 per barrel.
Overall net realized equivalent price averaged $5.50 per thousand cubic feet equivalent in the quarter. This marks a 28% plunge from the year-ago level of $7.69 per thousand cubic feet equivalent.
Operating Expenses
Total operating expenses for the quarter came in at $637.3 million, down 18.6% from the year-ago quarter level of $783.1 million.
Balance Sheet
As of Sep 30, 2015, QEP Resources had cash and cash equivalents of $495.8 million. The company’s long-term debt totaled $2,041.8 million, which represents a debt-to-capitalization ratio of 34%.
Guidance
QEP Resources projects 2015 production between 319 Bcfe and 328 Bcfe compared with the previous guidance of 297–315 Bcfe. This is the third production guidance hike for the company this year.
QEP Resources raised the lower end of its full-year capital guidance. The new capex for the year is projected in the $975−$1,050 million range.
Zacks Rank and Other Key Picks
Currently, QEP Resources carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the oil and gas exploration and production space are Apache Corp. APA, Cimarex Energy Co. XEC and Callon Petroleum Company CPE. All these stocks hold a Zacks Rank #2 (Buy).
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